Airline Fees: A $10 Billion Business

Contributing Editor Carl Unger believes that every trip is worth taking. He loves an extended trip to Europe as much as he enjoys exploring the towns and landscape near home. Basically, you'll find him wherever there is good food, fresh air, and plenty of stories to bring home.

Carl has been writing for SmarterTravel since 2005. His travel writing has also appeared on USA Today and the About.com Boston travel guide.

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Just in case you were still hoping that someday the airlines might take back all their fees, allow me to submit a number: 10.25 billion. As in dollars. Which is how much the airlines pulled in last year from ancillary charges and a la carte fees.

$10.25 billion.

Yeah, those baggage fees aren’t going anywhere. A new report from IdeaWorks proves, once and for all, what we all already know, which is that all those little fees and charges are an incredibly lucrative and, at this point, essential part of an airline’s business model. United, the report points out, generated almost $6 per passenger in baggage fees alone. Factor in change fees, meals, and so forth, and the airlines are adding significant per-passenger revenue.

And considering all this newfound cashflow is essentially keeping the industry afloat during these hard times, it seems foolish to think the industry won’t keep trying to add more ancillary dollars to their bottom lines. Beyond that, fees allow airlines to advertise low, enticing prices, because the “cost” of checking bags and feeding passengers is accounted for separately. That’s good for marketing in any economy.

Of course, it’s not just fees contributing to this astronomical number. All the vacation packages and hotel bookings airlines sell are a major part of the business. But those are value-adds for consumers, conveniences that are neither necessary for the traveler nor required by the airline. Fees, as we all know, are exactly the opposite: Mandatory nuisance charges, often for amenities or basic services that, once upon a time, were free.

But I’ll repeat: $10.25 billion. Those fees, as much as we detest them, aren’t going anywhere.

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